Why do you think the market prefers monopolies/oligopolies over co-ops?

Question

Is it all about advertising/marketing/sales? Is it that co-op members avoid future investment and drive research costs down. Is it because monopolies offer outsized returns to investors? where as co-ops only offer marginal cost incentives for consumers.I consider wikipedia a co-op of sorts but google, facebook, cell phone companies, oil companies all seem to eventually become cartels of sorts.

marto1 · Accepted Answer

It has to do at least in part with complacency accumulated in time as people accept some resource for granted.
E.g. in the beginning actors wanting a certain market good could be fighting very hard for it, but once acquired, over time, maybe across generations, energy put in place to retain said resource will begin to decrease. This is where "solutions" will come in place mostly in the form of increasing "efficiency"(put less energy) by centralization.
Take a look at US retail. In colonial times you had to provide for yourself and your family, hunt, farm, etc. While that continued for a long time more and more actors would pop up on the market doing hunting wholesale increasing efficiency for the community. The hidden tradeoff is a raise of a monopoly in said community so that efficiency wasn't really free. In the beginning people clearly understood the tradeoff and acted accordingly, their children understood it less. Snowball this to current days where many rural places in the US have only a Walmart as the single place where they exchange money for things, where culture is concentrated.
There are things that authorities can do of course, but this cycle is very old(described many times in the Bible for example) and it's up to people in the end to maintain a healthy market by directing decisions towards preventing monopolies. (e.g. co-ops)

webmaven · Answer

> Is it because monopolies offer outsized returns to investors?Yes. The cycle is: Use capital from investors to capture (or discover/create) a market, build a defensible 'moat' to exclude other entrants, and once secure extract money from the market to return to investors.In the simplest and most benign case, the moat is an economy of scale and/or network effect (the biggest is the biggest because it is the biggest and provides more ROI because it is the biggest).

PaulHoule · Answer

To flesh out your argument, consider this:https://en.wikipedia.org/wiki/The_Logic_of_Collective_Action

giantg2 · Answer

Many co-ops don't aim high enough. The most competitive companies aim to increase marketshare to increase profits. This leads to economies of scale, which also gives them an advantage.Basically, the market forces favor greed.

forgotmysn · Answer

a co-op can have a monopoly on a market. a co-op is a legal structure like an LLC, or corporation. it doesn't signify market penetration like monopoly or oligopoly does.

jjgreen · Answer

Economies of scale

Why do you think the market prefers monopolies/oligopolies over co-ops?

To flesh out your argument, consider this:
https://en.wikipedia.org/wiki/The_Logic_of_Collective_Action

Many co-ops don't aim high enough. The most competitive companies aim to increase marketshare to increase profits. This leads to economies of scale, which also gives them an advantage.
Basically, the market forces favor greed.

a co-op can have a monopoly on a market. a co-op is a legal structure like an LLC, or corporation. it doesn't signify market penetration like monopoly or oligopoly does.

Economies of scale